Blaming “globalisation” for inequality just lets national governments off the hook

The modern, interconnected world does not render them powerless

Did Donald Trump rise to power off the back of grievances about globalisation? Photo: Xu Jinquan/Xinhua News Agency/PA Images

Donald Trump, Brexit, populist pressures across the EU: are we entering a full-blown crisis of international liberal capitalism? There is no doubt that globalisation poses policy challenges for governments. But globalisation by itself did not force governments to adopt policies that have divided their countries, exacerbated inequality and hit social mobility. Many of them did that by choice.

The problem is not that we have opened the way for an increased role for markets, as many on the left (and on the populist right) argue. Markets remain the best way of generating wealth and opportunities, of challenging vested interests and of expanding people’s freedom. We are in this mess because we’ve forgotten the lessons of the post-war period. Basically, we have a crisis of distribution and opportunity.

Globalisation has played a crucial role in reducing poverty globally over the last 30 or so years. But there are winners and losers from increased trade and capital movement, as there are from technological change, and many governments, notably the US and the UK ones, have failed to take the necessary corrective action. Contrary to the anti-globalisation proselytising of the left, the US and UK governments could have acted; they were not prevented from doing so by the “forces of globalisation.” And, globalisation does not, as the liberal economic right tends to argue, require governments to reduce social spending, emasculate unions and cut taxes on the wealthy.

Successive American and British governments were not forced by “globalisation” to allow executive pay to balloon. While most dev…

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